Pan American Woods teak plantation in Palo Alto, Costa Rica (see map) as seen from the air
(see also 6 presentation sheets about Sicirec's goals and methods: The Sicirec Formula)
sheet 1
It is of the utmost importance that we develop methods to combine nature preservation with profitability. Only if this can be achieved will Nature conservation escape from “subsidy” mode and gain any sort of stability for the long term.
This is what the Sicirec Formula and the ArBolivia project are all about.
sheet 2
The Sicirec Formula implies a pattern of land use in which some areas concentrate on optimising financial profitability and other areas are devoted entirely to nature conservation. This results in a mosaic of productive land, embedded in a coherent network of ecological pockets and corridors.
sheet 3
Land owners are only allowed to participate in the project if they are willing to set aside a minimum of 20% of the land involved entirely for nature conservation.
As a result, this ecological aspect of the project makes cheaper financing possible and it actually pays off to apply the Sicirec Formula and make the project really “green”.
sheet 4
Our goal is to demonstrate that the Sicirec Formula works, producing profit for investors as well as for nature.
Once that has been demonstrated unequivocally, this method of organisation and of financing will spread rapidly all over the world, helping to finance nature conservation on an unprecedented scale – intertwined with the productive and inhabited areas of our planet.
sheet 5
For several decades more and more people have been looking for ethical investments that are beneficial to the environment and to the welfare of people instead of just for their own pocket.
As a response to this demand, many companies and projects have offered investment opportunities to the public claiming to provide the combination of profit and green credentials..
An example is the Dutch investment market where for 20 years or more a multitude of plantation forestry companies have offered their investment schemes, in response to the desire of investors to invest “green”.
After two decades it has become clear that very few of these plantation forestry projects have matched up to their promises. Most of them have not been able to generate any decent profits for their investors, nor produced ecological added value.
In the end the majority of plantation forestry projects offering such investment schemes have turned out to be either too small in size, too poorly managed, simply too lacking in forestry expertise, or a combination of all these and have subsequently ended in failure and recrimination., In addition to the financial failure, the ecological added values promoted in the sales literature were rarely implemented, at least to any meaningful extent. In all too many instances investment schemes were obviously set up purely as a front for attracting investors, without ever leading to any any serious attempt to establish an enduring project.
The bottom line is that in all these cases it appears that it has not been possible to combine profitability with nature preservation in any meaningful way.
Right from the very beginning of the Dutch plantation forestry boom Sicirec acted as a representative and service point for private investors in tropical plantation forestry projects.
Sicirec provided investors with a proprietary trading platform for forestry investments and collated information about the characteristics and qualities of the various projects. In the course of time the various shortcomings of the many plantation forestry projects on the Dutch market became more and more clear and Sicirec developed a quality rating system to help investors assess the values and potential of their investments, both positive and negative.
Over time Sicirec has gathered a vast amount of knowledge and expertise in the requirements and potential shortcomings of such projects and has acquired a good overview of the risks and pitfalls involved.
| One particular Teak plantation project, Bosque Puerto Carrillo, now called Pan American Woods, in Costa Rica, received particular attention from Sicirec when it approached the brink of liquidation in 1997. Having stepped in to stave off liquidation and organising the refinancing of the company, Sicirec assisted the management for a couple of years through a directorship, during which time the 3000 hectares plantation forestry company was stabilised and was subsequently able to start paying out dividends for the first time. Today Pan American Woods is one of the very few successful plantation forestry projects in Central America and larger investors have recently bought significant stakes in the business from the smaller initial investors. |
Pan American Woods teak plantation in Palo Alto, Costa Rica (see map) as seen from the air |
Since 2007 Sicirec has changed its role from advisor and service agency to actively becoming involved in plantation forestry itself as a project management company, applying its accumulated expertise to tackling the risks and pitfalled mentioned above. Our goal is to show that plantation forestry can indeed be set up successfully in these regions and can be profitable for all parties involved, if it is done in the right way.
In 2007 Sicirec has started its own plantation forestry project in Bolivia, under the project name ArBolivia. The Sicirec Formula has been applied in the ArBolivia project , which has been structured to tackle and avoid all the usual mistakes that were customary in the Dutch market over the past two decades.
This has resulted in a project with the following characteristics.
The ArBolivia project started planting in 2007 and has now realised about 1600 of the 7200 hectares. Some US$ 3 M has been invested to this date. The organisational structure has been set up and tested on the ground and has been adjusted in practices, as deemed necessary.
In short, the ArBolivia project is already well and truly up and running.
Today the ArBolivia project can and does offer an attractive financial return together with ecological added value and social added value. As such it is , as far as we know, the first of its kind in the world
The ArBolivia project is now looking for investors who wish to participate in this pioneering and vital endeavour. Investments can be made on two levels.
Investors can subscribe to a certified share emission of the participation company Sicirec Ecological Projects Forestry Finance BV (EcoProFF). This company invests in the ArBolivia project and subsequent projects that will also be set up according to the same formula. The company will oversee the goals and methods as well as the quality of management of the projects in which it invests
EcoProFF offers an attractive rate of return of around 10% or higher and also provides a liquid market for its share certificates.
For investors of € 1,000,000 and higher we can offer the opportunity for a significant uplift on returns over and above the already attractive rate of return that could realistically exceed 20% per annum over a 30 year term and longer.
Furthermore, Investors who are able to provide financial guarantees for the outstanding capital requirements of the project until break even in 2005/2006, could easily achieve an IRR of 30% or more. Guarantors will only actually need to invest a proportion of the funds which they commit to provide as a guarantee. The more environmental services such as CO2 credits etc. are sold and the more the amount of Green Loans that can be secured, the lower the proportion of the guaranteed sum that will actually be needed and the higher the rate of return.
(This very high upside potential is not capped for this project in order to make it attractive for larger investors. ArBolivia is the first project of its kind and is therefore to some extent experimental. For subsequent projects, the upside IRR potential will be capped.)
In all these cases the fall back scenario still produces an expected IRR of around 10%.
Investors who are interested in this novel opportunity to make a profit with nature conservation may refer to the following documents:
Investors can contact Sicirec through:
This website is an activity of Van der Molen Financial Services,
Copyright 2010 f(f): Dr. Hugo H. van der Molen (editor)
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